Thursday, 17 August 2017

REFLECTIONS ON THE MUSKRAT FALLS PROJECT

Guest Post by David VardyIntroduction

The sanctioning of the Muskrat Falls project
in December of 2012 was a huge mistake, one which has spiralled into a major
economic and environmental catastrophe. The warnings of the joint federal
provincial panel were ignored, as were those of the Public Utilities Board.
These warnings relate to the lack of a business case for the project, the high
risk for a small province, the adverse demographic factors, the lack of export
markets and the high unit cost.

A
Gamble that failedIn a Telegram article dated May 25, 2013 the
Honourable John Crosbie said that “Muskrat Falls is worth the risk”, quoting T.
S. Eliot on the subject of risk: Only
those who would risk going too far can possibly find out how far you can go.
Since then we have sailed on a sea of risk and reaped the whirlwind.

David A. Vardy

The
challenge now is to prevent the risks from destabilizing the provincial
economy. The risks of operating the project may prove to be just as daunting as
those of building it, due to the impact of high power rates. The incidence of
these power bills is likely to be placed on those with the least ability to
avoid the burden, namely residential customers, whose only recourse will be to
leave the province.

The project was based on speculation that
known risks would not turn against the project, risks of escalating costs,
declining oil prices and decreasing demand for electricity. Cost estimates were
contrived to ensure project sanction, by using unrealistic numbers, cost
estimates that were known to be too low. It has been alleged they were
deliberately falsified to encourage sanction by government in December 2012.

Nalcor substantially reduced its demand
forecast in 2016, indicating that the load forecast used to justify the project
was as questionable as the cost estimates. A more cautious approach would have
built capacity incrementally rather than incurring the large capital cost of overbuilding,
taking the risk that lucrative markets to recover costs could be found for
power surplus to domestic needs.

Risk
borne by ratepayers

It was a fundamental mistake for the province
to embark on this project, placing all the risk on ratepayers. The “take or pay”
power purchase agreement will place the majority of the burden on residential
customers. By sanctioning this project government ignored the huge demographic
transformation, with more senior citizens, declining working age population and
shrinking overall population.

Projections of demand ignored the first law
of economics, the law of demand and price elasticity, which rules that people
will substitute other alternatives when prices rise. Demand will decline rather
than grow in the face of surging power rates. Government and Nalcor relentlessly
insisted that we “need the power”, failing to recognize that unaffordable rate
increases will likely result in such drastic reduction in demand that no
Muskrat Falls power will be used within the province.

Bargaining
Position with Quebec

It was also a mistake to believe that Muskrat
Falls and the Anglo-Saxon Route would strengthen our position with Quebec. The
two submarine crossings and the relationship between Nalcor and Emera have not
helped us. We became prisoner to Nova Scotia in our quest to finalize a loan
guarantee agreement with the federal government, who demanded an
interconnection with the rest of Canada across the Cabot Strait, as a
precondition.

The Maritime Link is sized around Muskrat
Falls and offers no redundant capacity to carry either Churchill Falls power
after 2041 or power from Gull Island, which continues, inexplicably, to be the
Crown jewel for ambitious politicians. The unnecessary investment in high cost
Muskrat Falls power precludes us from benefiting fully in 2041 from access to
low cost Churchill Falls power, because Muskrat Falls more than satisfies our
needs for the medium and long term.

False
Premise

Reliance on Muskrat Falls ignores the fact
that most of the demand is located on the Avalon and that we will still need
emergency power based at Holyrood. It was a huge mistake to think that Holyrood
could be shut down and that our emergency power would be supplied from Nova
Scotia. We cannot depend on 1500 km of transmission lines crossing a variety of
climatic zones where icing and high winds will knock out lines and iceberg
scouring in the Strait of Belle Isle will threaten the submarine cables. We
could never choose between Muskrat Falls and Holyrood because Holyrood, or its
replacement, will continue to be needed.

The reference question put to the PUB in 2011
posited a choice between two complementary projects which were never
alternatives. This false premise was compounded by precluding the PUB from
examining other alternatives, such as wind, solar power, energy efficiency and
demand side management.

The
Brinco Model

Muskrat Falls began with an integrated
management structure, with SNC Lavalin taking the lead in engineering,
procurement, construction and management (EPCM). This changed over time with a
downgrading in the role of SNC Lavalin and with Nalcor assuming the lead,
relying on SNC Lavalin for engineering design, but with Nalcor officials
signing off on procurement, contract awards, change orders and disbursements.
This departs from the way Brinco built the Churchill Falls project and Muskrat
Falls has suffered from the departure from the Brinco model.

Brinco knew it needed to bring in outside
expertise and they retained Acres Canadian Bechtel (ACB) to undertake
construction at Churchill Falls, bringing it to completion within budget for
$946 million and ahead of schedule. (See https://www.ieee.ca/millennium/churchill/cf_history.html)

The Acres
Canadian Bechtel (ACB) consortium acted as agents for CF(L)Co, charged with
responsibility for engineering and construction management. The construction
organization in the field had ultimate responsibility for contract administration,
inspection and construction coordination.

All work on
the project was carried out by contractors. More than 180 construction and
services contracts were awarded, ranging widely in value, but with a maximum of
$75 million for a single contract.

Note that the Astaldi contract began at $1.1
billion and has risen to $1.830 billion, without explanation. Along the way
they built a canopy or dome for $120 million but subsequently discarded it as
junk. Brinco and Acres Canadian Bechtel had a limit of $75 million for any
single contract. The limit in Hydro Quebec is $50 million for a single
contract. Smaller contracts allow for more competition. We should at least have
pre-qualified the bidders, probably removing Astaldi from consideration, due to
its lack of Canadian and northern experience. Instead we opted to maximize the
risk.

Public
Tendering and Cost Plus

The tendering process has been byzantine,
anything but transparent, and outside of the public tendering rules followed by
the rest of government. Nalcor has never provided convincing evidence why it could
not operate through public tendering nor have they explained why they did not
place a cap on the value of large contracts, as was done for Churchill Falls.
The Astaldi contract was essentially a cost plus contract, despite the
statement by Ed Martin at the 2015 Nalcor AGM that it was a “lump sum” project,
fixed in terms of the projected amount of concrete to be poured. This point was
confirmed by EY in their April 2016 report when they said that the payment mechanism is based on
person-hours expended rather than m³ of concrete poured. This mechanism did not
capture the potential for poor contract management labour and the consequent
decoupling of labour paid from work completed. It was Nalcor, namely NL
ratepayers, who took the risk, and not Astaldi!

Hydraulics
and water management

One of the big advantages of Churchill Falls,
apart from the large reservoir, was the hydraulic head of 312 metres, compared
with 35 metres for Muskrat Falls, 100 metres for Gull Island and 176 metres for
Bay D’Espoir. The head is how far the water falls from the reservoir to the
tailrace.

Of course Muskrat Falls shares the reservoir
with Churchill Falls and that is a major advantage. However the lack of an
effective water management agreement with Hydro Quebec makes it quite
impossible to achieve the 824 MW of capacity that has been touted. The Quebec
Superior Court decision rendered by Justice Martin Castonguay last August
confirms that Nalcor’s solution to the problem, approved by the PUB in 2009, is
not practical or realistic. Resolution of this problem requires either a
negotiated settlement with Quebec or winning our appeal of the Castonguay
decision to the Supreme Court of Canada. This is another unresolved risk.

Sensitive
Clays at the North Spur

The April 2013 risk report from SNC Lavalin
confirmed the high risks, risks which should have been mitigated in advance of
sanction. We now know that this report did not get the attention it merited.
One of the high risk areas identified was the North Spur and the potential for
sensitive clays to liquefy, due to water pressure, when the dam is impounded.

Sadly the PUB missed an opportunity to deal
with this issue as part of its hearing into supply issues and reliability of
power. This
hearing began with DarkNL and is continuing. The
PUB accepted Nalcor’s argument that consideration by the PUB of the risks of
the North Spur and of the ineffective water management agreement was outside
the scope of the hearing. They also contended it would have defied the
Exemption Order which prevented the Board from exercising its normal regulatory
authority over the Muskrat Falls project. The PUB allowed the filing of
evidence relating to the reliability of the transmission line but disallowed
evidence concerning the generation project itself, including the North Spur and
water management. These inexplicable decisions of the Board left these two
issues bearing enormous risk unresolved.

We continue to lack
independent validation of the safety of the North Spur. A recent thesis by a
graduate student at the Lulea University of Technology in Sweden confirms that
safety is a huge problem. An article written by his thesis supervisors, Dr.
Lennart Elfgren and Dr. Stig Bernander, adds credence to the argument that the
remediation at the North Spur must be reviewed by a panel of eminent
geo-scientists.

The unresolved risk of the
North Spur places people in danger, along with the capital investment,
demanding appointment of a review panel.

Will Muskrat Falls be mothballed?

We continue
to dig a hole for the province as we pour money into this money pit. The
surging rates will knock electricity demand back to the point where no demand
for MF power will exist. Export markets will return only two cents per KWH,
making a negligible contribution to rate mitigation. Vital equipment is being
sourced in China and may be unreliable. The 2013 SNC Lavalin report on risk
said, based on past experience “quality, performance, warranty service and
schedule problems can be anticipated with these Lump Sum turnkey packages
(i.e., major claims and delays.") Quality control is a problem
because Nalcor does not have the experience to manage a project of this
magnitude.

The
incremental costs will be around $800 million annually and rising. Between $120
and $200 million of Bunker C might be displaced but the economics of replacing
$200 million of oil with $800 million in capital costs again defies economic
logic. The $800 million is the same order of magnitude as the tax increases and
other revenue measures introduced in the 2016 budget, many of which were rolled
back because of public resistance. This is likely to become a big white
elephant, one we cannot afford to operate, as consumer resistance to high rates
stifles demand.

Transparency

The promise “to open the books” on Muskrat
Falls has not materialized. EY produced only an interim report. The Muskrat
Falls Oversight Committee has failed to produce the quarterly reports which
were issued prior to the election, attempting to fill the void by posting a
serious of vacuous monthly reports. The Oversight Committee was too close to
government (and to Nalcor) to be effective, being solely comprised, until
recently, of government officials.

The so called “Independent Engineer”
(Montgomery, Watson and Harza, MWH) was taken over more than a year ago by
Stantec, a big Nalcor contractor, without remedial action to correct the
conflict of interest. These oversight bodies were far too reliant on data
supplied by Nalcor, without critical testing. The PUB remains neutered while
Nalcor continues as an unregulated government-owned utility, with unusual
powers (e.g., exempt from public tendering) exceeding those of other crown
corporations.

Provincial
Fiscal Situation

Our fiscal situation is desperate, more
precarious than that of Puerto Rico, which is now under a federal board of
supervision. Nova Scotia is running a surplus, without the high oil royalties
we continue to enjoy. Our public sector is far too large, as shown by a recent AIMS report.

Forum
for Debate

The House of Assembly has not been seized
with the problems. No emergency sessions have been convened to avert a growing
crisis. Nor is the provincial Cabinet focused on the issue of Muskrat Falls.
Oversight mechanisms are mostly inactive. Minimal information has been released
by the new Board and Nalcor’s CEO. No
explanation has been given for the burgeoning cost of the Astaldi contract or
whether the flaws in the original contract have been corrected. Citizens are
left in the dark and this is not acceptable.

The latest monthly report shows that in May
of 2017 expenditures were $154 million dollars. At $500,000 per person year
this project cannot be rationalized as a make work project nor can it be
explained as part of a rational energy strategy or economic development plan.
It is simply a fiasco and one which poses an existential threat which many
citizens have yet to perceive.

Is it normal for a society in crisis to be so
blasé about its future? Are our institutions serving us well, including the
provincial and federal governments, Nalcor Energy, Newfoundland Power and the
PUB? Memorial University appears to be punching well below its weight in
failing to encourage public engagement on this issue and the fundamental
economic and fiscal crisis of which the Muskrat Falls fiasco is a part? They
have failed to respond to the challenges issued by Edsel Bonnell and others to
create a new forum to bring forward possible solutions

Conclusion

The government seems to be impervious to
rational thought, having taken refuge in the wisdom of Stan Marshall. Stan
refuses to seek an independent review of the North Spur and government will not
overrule or rile him. Stan has failed to deliver a rethinking of this project
or even a change in the management team.

Is there a further role for the federal
government? We could not have sanctioned the project without the loan guarantee
of $5 billion, which has now been increased to $7.9 billion. Should we commend
or condemn the federal government for their role in enabling us to embark upon
this risky undertaking? The loan guarantee agreement was designed to ensure
that the ultimate responsibility and financial risk was deflected back to
provincial ratepayers, minimizing the risk to the federal government. The
province is obliged under the 2012 agreement to ensure after the project is
completed that “the regulated rates for
Newfoundland and Labrador Hydro (“NLH”) will allow it to collect sufficient
revenue in each year to enable NLH to recover” costs incurred.

Ultimately the risks came back to the
ratepayers in NL. Should we now ask the federal government to reactivate the
inactive Lower Churchill Development Corporation (LCDC) and to share in the
financial risks of both construction and operation? It is clear that the
federal government will be called upon to take a larger role, beyond simply
raising the cap on the loan guarantee. It is also questionable that we as a
province are going to be able to operate the facilities on our own and to bear
the full cost burden.

Will a renewed federal provincial corporation,
bearing 49% of the risks, be the best vehicle to finish the project and to
operate the facilities once completed? Or will we take the far greater risk of
going to Quebec for a comprehensive agreement which will enable us to complete
the Muskrat Falls project, as part of a package involving water management,
Gull Island and extension of the Churchill Falls contract beyond 2041? This
might offer short term gain but a mountain of long term pain.

50 comments:

On budget and on time with a loan guarantee and safe North Spur it wasn't a bad project but perhaps not the best option.

It now appears the budget and timelines were all contrived so the only other thing that adds up is fraud. Who is making all the money. Why did Ed Martin state that the Astaldi contract was fixed price? That contract also added two years to the project so adding an additional $800 Million to the interest costs

Excellent summary indeed!!! However Mr. Vardy you should have also mentioned what is taking place south of the border which is the main export market for both our future electricity production AND the oil from the Grand Banks as well as most of our other resources. First the price of oil or rather the $45 to $50 per barrel price of oil that has been sustained for over a year. It appears that the fruits of the Bakken shale oil and other fields have done their duty and lowered the price low enough to sustain the US economy to the detriment of places like Newfoundland and Alberta where there is a lull in oil developments and where many Nl'ers work. This logic also applies to the price of Natural Gas which is so low that many fields aren't being developed nor well they be in the near future AND it is Natural Gas that has supplanted coal as the source of electricity generation assisting in keeping the price of electricity low. The second point is the competition in electrical generation from Wind Turbines and Solar Panels which have the potential to halve the price of electricity through competition over the next ten years or so and enable homeowners and businesses in the near future to buy electricity on a truly open market rather than relying on a single long term supplier like Hydro Quebec(ie Churchill Falls). This coupled with energy storage developments will fundamentally change the way electricity is bought and sold in much the same way the Americans buy cell phone services. We could be soon looking at a US market that demands vigorous competition soon and the fruits of 2041 may well be redundant when we are able to pull the plug on Hydro Quebec. You may have also touched on conservation, other forms of energy (Ground to Air and Air to Air as well as Tidal and Geothermal), efficiency increases in usage, storage systems (Battery, Compressed Air Pumped Hydro etc.) and general changes in people's attitudes towards consumption all of which affect our sale of electricity both here and abroad.

Excellent summary Dave, as has been all your work on this monstrous risk to life and taxpayers pocketbooks.

Yes, there is fraud associated with the contrived numbers upon which project sanction was granted. Those responsible for contriving the numbers should be charged accordingly and as part of their sentence, or as a separate civil action, should be made to pay into a Muskrat Falls Relief Fund to be used to assist the residents of Mud Lake and offset the burden to taxpayers. This is surely insufficient funding. The Muskrat Falls sanctioning seems to have come as an order from the top to provide the contrived numbers. Whether the 'top' was within Nalcor or within the Government of the Day must be determined and these individuals also subjected to civil suit to further augment the Muskrat Falls Relief Fund.

Stupidity must also be challenged! Those who perpetrated the Exemption Orders; the one removing Nalcor from the supervision of the PUB and the one exempting Nalcor from the Public Tender Act must also be brought to civil action and the proceeds added to the Muskrat Falls Relief Fund. Further, whoever placed an individual with extensive telecommunications experience in charge of a heavy engineering project should be required to pay for such stupidity as should whoever designed the agreement with Astaldi.

Then we come to those who simply could not perform their jobs - the people who accepted transmission cables which were found after much stringing to be faulty; people who designed and constructed the formwork for the disastrous concrete pour; and people who designed and constructed the sieve of a coffer dam; and all the other bits and pieces of stupidity which allowed the cost and time frame of this project to threaten to bankrupt the Province - let us even include those in the federal Government who became cheerleaders rather than understand and act upon the warnings of the federal provincial panel. All these individuals should contribute to the Muskrat Falls Relief Fund.

And we must also include all those involved with the charade leading to Ed Martin receiving his over 6 million dollars and seek the return of that sum into the Muskrat Falls Relief Fund.

All those who had/have the duty to be transparent and provide direction to the project from their position of oversight must also be held accountable. Both the public servants and the Government members of the House of Assembly share the blame in this boondoggle and they must be forced to contribute accordingly.

The fund will be insufficient to assist residents of Mud Lake when the North Spur gives way but it will at least punish those who contributed to this massive monument to greed and stupidity.

OMG, this is worst than anyone could conceive in their most horrible dream! But as we say no point in crying over spilt beer. And the first thing we all have to accept the problem, and who caused it, before we can begin to comphrend it's magnitude, and even think about a solution. Let's face it, the buck stops or begins with our elected representives, that is our system of government. Any electived house of assembly member that served during this time, from around 2005 to 2015, YOU ARE RESPONSIBLE! Some bear greater responsibility than others. The premiers of the day bear the most responsibilities, followed by cabinet members, followed by government members, followed by leaders of opposition, and all members of the opposition parties. None if you are innocent, you all have blood stained hands. First if all accept your responsibility and failure, and recognize that you were the problem. How many if you can look in the mirror and not throw up! You are all hiding and lurking in the shadows of this catastrophic continuing event. Recognize and accept total responsibility, then and only then can we look forward to the challenge of dealing with this all consuming, bankruptcy problem and all it's pitfalls. Thats our system of government, the buck stops with our elected respresentives.

David, great summary... one you should offer the Telegram to reprint for multiple insertions.

The most disturbing part of this posting is the 'Forum for Debate'. It is quite remarkable that this topic is not getting more attention. Do we really need to wait until the first lofty bills? As far as I'm concerned, all politicians and institutions are accomplice the to enabling this debacle.

I can understand the PCs laying low... Davis is playing victim and Kent is more concerned about Trumps speech to Boy Scouts then the future of our province. His aspirations of Premiership are trumping any chance to address an issue sure to cast a shadow on his party.

And where is McCurdy? I am of no stripe but do the NDP not see a glorious opportunity here to gain some political traction. Earl, for god sakes, make some noise. Run a campaign on accountability and you may break some barriers.

Mr. Ball, you are a half-term away from the title of our useless Premier in history? Your lack of interest and action regarding anything Muskrat is a clear indication of your commitment to the leadership role you were empowered and the well-being of our people. History will not be kind to you or Danny.

Are we insolvent yet? Is it time to unwind the mess in an orderly fashion?

NL has a debt of about 12 billion as well as a declining population of about 528,000 who are rapidly ageing and need old age homes / care / medical care. 20% of the population is over 65 and there is a large outmigration of young people balanced somewhat by incoming retirees. The driver of outmigration is the dismal prospects for employment and no jobs for those finishing school. Fisheries / pulp and mining are not well.

The budget deficit was over a billion last year. We might strike some deal to change the equalization formula to exclude oil revenue (not really fair to other provinces). I looked some history and found this from 2003 (Royal Commission Report):

Equalization, which is the largest single component in the province’s revenue base, increased by 29 per cent from $877 million in 1992-93 to the latest revised estimate of $1,132 million in 2002-03. Equalization constituted 27.5 per cent of the province’s overall current and capital revenue base in 1992-93 and 25.9 per cent in 2002-03.

The largest equalization payments ever received appeared to be smaller than our current spending deficit.

Question: Is it even possible to pay off our debt? Has anyone tried to model this with a continuously declining population?

The federal government has given a $7.9 billion loan guarantee, where is the other $5 billion going to come from? What can NL/Nalcor use as collateral to borrow this amount? The province is obliged under the 2012 agreement to ensure after the project is completed that “the regulated rates for Newfoundland and Labrador Hydro (“NLH”) will allow it to collect sufficient revenue in each year to enable NLH to recover” costs incurred. Could be considered a guarantee. The only other asset we have is our share of Churchill Falls. Can this be the reason for the dam project to take our 2041 future from the people? Our one hope is to mothball the dam now. ( Nalcor says it’s good for 100 years) so they have lots of time to restart it. If the feds are unhappy with this they can buy 50% of the dam for $5 billion or more depending on cost over runs.

This essay by David Vardy is a masterful one. It brings home the realization that this project has changed from the promoted brilliant vision of Danny Williams, which was to be executed by world class engineers and management of Nalcor, but has gone from blunder, to boondoggle, to fiasco, and now to `economic and environmental catastrophe` status. He quotes John Crosbie: `Muskrat Falls is worth the risk,..only those who risk going too far can possibly find out how far you can go`. It terms of risk takers, Hilter comes to my mind, when he marched into Poland. Or Trump, this week, equating terrorist Nazis to those who opposed them. Here, Danny`s risk, and all who promoted this project on us, is one that sees spending 800 million a year to save about 150 million for Holyrood oil, while deliberately ignoring other much more cost effective alternatives. Vardy covers many of the gravest errors, both economic and engineering: the contrived demand forecasts; the false assumption that we needed this block of power of 824 MW; that 824 MW of power is not attainable;that no expertise in construction was utilized such as Brinco did for the Upper Churchill; that reliability is reduced from the many risks associated with this project; that Holyrood cannot be shut down and is essential for backup power to the Avalon; that unresolved issues as the North Spur, risks both life and also risks the loss of this huge capital investment; that surging power rates will knock electricity demand back to the point that no demand for MF power will exist; that we are in a more precarious position that Puerto Rico; that Nova Scotia, who lack the oil royalties we have, are in a surplus positions; that our institutions have failed us (governments, Nalcor, Nfld Power,the Oversight Committees; the PUB and MUN, and even Fortis (via Stan Marshall`s expertise). He concludes by posing questions that may offer short term gain for long term pain.

Such a comprehensive essay both in economic and engineering and management analysis is worthy, I think , of an honorary engineering degree......but not from MUN (given their lack of concern and likely being complicate in this fiasco).

I just read https://www.gov.nl.ca/publicat/royalcomm/research/Norris.pdf "The fiscal position of Newfoundland and Labrador". It is a depressing read from March 2003. Oil was only expected to be $24 a barrel and only a temporary boost. Canada was cutting back on joint funding etc. However, The conclusions were pretty clear back then - we need to spend within our means and start paying down the debt. That meant a large decrease in the public sector and program expenditures.

Then we got lucky and oil production peaked, Oil went over $100/bl and the windfall was upon us. We had the perfect opportunity to fix the mess.

Unfortunately a pack of psychopaths and their sycophants gave us what David Vardy describes above. We not only squandered the oil revenue on expansions everywhere, we spent 12 billion and climbing on an asset that is worth nowhere that.

I'd like to see a report like the one linked above updated to include the new reality including 1) Pension liabilities are now in the form of a long term bond 2) the recent defects that are truly monstrous 3) Muskrat Falls as a liability/debt that won't be funded from just power bills because it can't be.

I wonder what percentage of our future revenue will be needed to simply pay interest on debts? In 2002 it was about 14% depending the accounting method. We have about doubled our debts since then, so are we looking at 30% interest cost to total revenue in the future? That is one hell of a burden if it prevents you from ever being to pack back the principal.

David you are to be congratulated for a comprehensive and incisive analysis of the MF debacle.

The issues you clarify revolve around one thing, the absolute, unregulated control Nalcor was given with the public purse and limitless untendered contracts without meaningful oversight. Was this not obviously a recipe for disaster from the outset? Why was the unfettered opaque looting of the treasury not decried before now? Why was a lack of transparent regulatory oversight allowed to happen? Is protecting democratic institutions from abuse and neglect not the responsibility of those that understand that without oversight and accountability there is no democracy? Why has it come to this?

Any solution that does not expose the feudal unchecked ransacking of the treasury and public institutions including the PUB, AG, CA is insipid and fails to address the rot.

Find your backbone David and lead the heroic struggle to restore your democracy and institutions. It may even enhance your self respect.

The Telegram has advised by email that "we cannot post something from someone else's blog unless the author submits it and it meets our letter policy for word length etc. I believe the Telegram limits letters to 1000 words, and I do not know if they would make an exception as a OP-ED piece or something. If not, then breaking in into Reflections Part 1, and then followed by Part 2 may be the way, but would not have the same impact. Whichever way, the importance of this piece should be available to the wide readership of the public, and would aid the Telegram in informing the public on this topic, being critical to our future.Winston Adams

I just put in similar requests to VOCM and CBC (go public). In CBC's case, I requested reprinting the essay as a minimum or better yet, as the basis of a documentary. I will try some other channels into CBC as well. Hopefully others will too.

Here is some Breaking Newss reported on NTV, that may interest Robert Holmes and others 1. Gander airport is proceeding with a 26 million dollar upgrade to counter energy costs, now at over one million dollars a year for electricity.......it will use ground source heatpump.2. Andy Wells now believes in Climate change, and is speaking out for the need for energy efficiency to bring down the use of electricity. Now that is akin to the conversion of St Paul. I wish him well on his election for mayor of St Johns, for that reason alone. And it is a poke in the eye to Muskrat and Nfld Power , Nfld Hydro and Nalcor and the idiots that promoted Muskrat. 3. Take Charge says while minisplit heatpumps can save you energy, not all homeowners should use minisplit heat pumps: that you first need good insulation and be air tight..............but is statement by our power companies evidence based?Here is what I have found from testing: a R2000 house with good insulation and good air tightness will give you a payback in about 10 years with power at 10cents per kwh An older house will good upgrages but not to R2000 standards will give you payback in about 6 years. An older house with poor insulation and a bit leaky for air tightness, can be expected to give payback in 5 years or less. This may not seem logical, but the more you invest in quality construction, the less heat you need, and therefore you have less heat to save, requiring longer payback. But the poorer quality house needs a bit more capacity in size, but still has quicker payback. Just more of Take Charge BS to discourage efficient heating systems. Scandalous. Of course monitoring can prove this..........which Nfld power refused to do!Winston Adams

Just as David Vardy says, wisely, as power rates rise, people consciously conserve and look for smart alternatives, and the demand eases. All new building construction nowadays should be approached from a "zero net energy" point of reckoning. The low hanging fruit are the larger building complexes down to the single family housing. Challenge your Architect/Engineers to keep the goal in mind. Cut dependence on fossil fuel by 50% initially, and over time cut it out completely. You have got it right Winston. Keep up the good work, and get others on board.

All down the road "me sonny-boy". But if muskrat is any indication that will be lied about and kept from the public as long as possible by the powers that be and the brave media. Will probably read about it in the NY times first. But will probably happen around the same time that muskrat is put in moth balls, and should the price of oil take another dip. Stay tuned....

They will use all sorts of tactics to buy time. Pension liabilities were taken off the books and replace with a bond. Muskrat Falls is an ASSET not a liability because people like you will be paying for it and the more you pay, the more profitable it is. (I'm being sarcastic here)

It is all a farce of course. That which cannot be repaid, won't be repaid.

There is an interesting article here http://www.globalresearch.ca/people-must-self-organize-keep-up-the-pressure-on-their-governments-if-we-are-to-bring-about-radical-change/5604476 that discusses illegitimate debt.

The monies we borrow for regular budget deficits are something we also benefit from. These aren't odious, but debt like the damn (or is that dam) portion of Muskrat Falls is indeed illegitimate. The only people that benefit from MF are financial institutions and those profiting from the construction and by owners of potential mines in Labrador. Meanwhile, the general population ALL suffer.

An excellent summary David Vardy. Thank you. This piece really belongs in the public domain. The Telegram, W5, CBC GO Public, TV interviews with Global etc. The public needs to know this. Those who have the contacts and know how to get the public media engaged, please do so.

I am amazed at how all the civil institutions failed. The AG, Premier's office, Ministry of Justice, the PUB, the Minister of Natural Resources, simply said "yes" to the decision that Danny Williams made. The Forensic Audit will no doubt get to the bottom of this. It is so easy to understand why all the above named departments are resisting the Audit as strongly as they are. The only entity that resisted this was SNC Lavalin, through their "un received" risk report and their scope was very significantly reduced and almost thrown off the project.

Readers should find Pam Frampton`s piece of Aug 16 at the Telegram interesting (Muskrat Fall: was always a done deal) While we associate the word BOONDOGGLE with Stan Marshall last year, Pam, in 2012 stated `we`ve had our share of boondoggles in this province, so people are naturally leeery...and wisely so. She quotes David Vardy to the PUB in 2012 `this project might turn into an albatros` In the comments is JOHN SMITH with his usual nonsense. But go into the replies to comments;

Wangersky takes Smith to task (Smith stating that Holyrood was the dirties plant in Canada. Russell cites 5 plants in NS and NB that are much worse, and Lingin NS being 12 times worse on SO2 emissions. It long past due that the Telegram call out what is not factual and put a stop to the lies and distortions that got us into this mess, the so called false assumptions.....many which were deliberate deceptions. This is what an inquiry and audit would find......however there was always a lack of basic research to counter the false assumptions, promoted by so called world class experts. I encourage Pan and Russell to continue to counter the lack of basic research, especially the garbage promoted by John Smith, and the promoters of the boondoggle. Winston Adams

The Economist has a piece about Muskrat. In it, it quoted Wade Locke as saying the Nfld economy is "desperate' ( whose fault is that?) Yesterday the media carried a piece about the local sex industry. Never really thought of it as a "industry", but seems to be booming, and a bad indusry, such that 2.3 million is helping 15 "industry" workers with assistance and alternatives. That is almost as much as our power companies use to assist 200,000 households and various business with efficiency programs. But for the sex industry, it is Federal money, so why not be grateful to our member Whalen in Ottawa. Considering that only 50,000.00 was found to assist thousands of Labrador coastal residents on the winter food subsidy where over 60 percent of families have food shortage issues, and prices are about 4 times that of St Johns food..........well...........we sure need a lot more of federal help it seems,.........That program but Cathy Bennett enables each resident to get a single 8 dollar can of stew for 2 dollars, .......that's it folks! But they live in Labrador ......so low on the priority list. Maybe we need to identify some needs as an 'industry" to get results. How about the Hunger industry. And the Cold industry, for those who can't afford higher electricity bills. Remember the HELPEEEEEEEEEEEEE program from the last budget......Nfld Power waiting for the Fall season to implement that, and they are rather excited about it..........1 million I think divided by 200,000 households ..........better get in early.......... so little because it is a provincial program. We need a federal HELPEEEEEEEEEEEEEEEEprogram , me thinks, like chalk and cheese .........maybe because we are more or less in the poor house here, except for Nalcor spending.

It would be worth people"s while to read this article. It shows the extent that research is reaching into the energy fields and how far behind we are here in NL. Is this the answer? I don't know but it is something to keep an eye on:

Interesting piece of research. It is basically a chemical reaction ( "What we discovered is a mechanism for a rapid and spontaneous hydrolysis of water.") that can produce H2 gas from water and the estimate is: "one kilogram of aluminum powder can produce 220 kilowatts of energy in just three minutes." The fact that it is an American researcher from the US Army gives it a bit of legitimacy. It may definitely a breakthrough in H2 production a gas which if safely and economically produced stored and able to convert back to H2O for electricity production could revolutionize the energy sector as well as the Automobile and transportation industry

The H2 weight equivalent to a gallon of gasoline is 0.997 Kg. Given this conversion number it is a notable breakthrough if it can be massed produced economically and safely. The other problem with H2 is storage and delivery of the gas which is both corrosive and needs to be stored in pressure vessels but even with that consideration the results look promising.

This is ridiculous. We all must stand together and stop this atrocity and save us and future generations from this mess.

We can forget about Ball doing anything it seems like Williams has him in rear pocket.

We the people need to organize and stop this. We need to find out who are profiting of this mess. There is something seriously wrong with all this and someone is still pulling the strings behind the scenes.

Do anyone know who the major shareholders are of the company laying the cable?

How about a protest by people converging at either or both Nalcor and Fortis head office and burn their power bills as a symbolic protest what we will not endure the shock power rates coming our way. We will switch our use for heating, reduce energy use and have no need on the island for Mf power. As this reduction is going to happen anyway, let the powers that be know our intentions..........don't wait for the shock rates........tell them it not acceptable. We need thousands .........set up an oil drum , set a fire and burn our bills. Its symbolic.......but important to give notice. This should not be done next week but maybe within 6 weeks, time for the word to get out.PF

Those who are not voicing anger and still supporting this atrocity are either oblivious to what's going on around them or are (or family members) directly profiting from the project either through working there or investments in the companies doing business.Other than a mass uprising we are being led to bankruptcy as a province and severe financial hardship as residents. Our electricity rates will at the very least double thus leading to increases in everything else in this province.As electricity use declines taxes go up. One way or another we must pay for Danny's ego and ill conceived boondoggle. It is he who pushed it forward, Dunderdale who sanctioned it and Ball who is still allowing us to be raped. We have no protection whatsoever from those who still wield the power. As long as their pocketbooks are being filled, damn everyone else.Nowhere else but in a 3rd world country would this be allowed to happen. The smell of corruption is unbearable and we a still being screwed and no one doing anything about it.Dwight Ball will go down in history as the most unaccomplished Premier ever. He has the power to get to the bottom of our demise yet refuses to do so.

As a footnote, MF was an insurance that Galway would have sufficient power and in no way was the exalted one going to be beholding to Quebec, damn everyone else.

You'd might as well call it Danny Land because there is a road called Danny's Way and the model home has a flat screen TV showing his Danny's head in an endless loop and Galway is named after his mothers family and there was a old family photo in the living room). Ego Ville. Maybe we need a contest to name the place. Boondoggle Hill. Narcissist Point.

I found it particularly ironic that the first home has a multi zone Daikin heat pump installed. It is also as if Danny knows there is going to be a power problem. All the dream homes I looked at until now have had electric baseboard heat so this is a significant departure.

Our apathy has gotten us in this mess. We knew from the start that we were not getting information regarding the project and there was no clear answers to concerns brought forward very early on by people like Mr. Vardy. Yet we remained virtually silent and let it all continue without a peep. To add insult to injury, We watched Ed Martin walk away unscathed taking millions with him for his "service".The rest of the world is moving to alternative energy sources at breakneck speed. (Just look at Elon Musk's recent contributions) The big question now is what are we to do as an aging, fixed income population? I predict we will keep on keeping our heads buried in the big until that first home heating bill arrives in the mail.

This is an interesting article. It would be a good idea for the old underground bunkers at the former Argentia Naval Base with such close proximity to the water and the availability of wind energy if so built. I believe there was already a proposal to build such a centre at Argentia before. It goes to show how far behind we are in attracting new investments and it will only get worse as the price of electricity increases.

No excitement about my idea about protesting by burning power bills.....as I expected. But that was just part one of the idea. Ok, here is part 2 of that proposal: like Chase the Ace, everyone who shows up wins a price. Not just one prize for 5000 say, but everyone gets a prize. With chase the Ace, your chance is one in 3 million, here it is 1 out of 1...........100 percent of you win. Here is how it works: 1. The idea is to demonstrate that we will not tolerate Muskrat falls and the high power bill coming our way. This power and this project was never needed . And we don't want it, and don't intend to use it.2. Reduction of power use saves you money, reduces demand for electricity and ensures that MF power will not be needed ......so then why continue to throw money into that sinkhole.3. Significant reduced electricity is only available by reducing electric heat loads, (60 percent of a house's energy use) and hot water(18 percent of the energy use)4. There are tons of companies out there who make their living from this type of business : insulators, heatpump installers, air sealing companies, window suppliers etc.,pellet stove installers, wood stove installers and suppliers, even wholesalers and manufactures who deal in these products, They all have an expertise and self interest in wanting more of this business. Their business will intensify as power rates go up....but why wait?4. We need to get these trades and businesses on board to help the consumer........but how?5. Many contractors operate with markups of 30-35 percent, wholesales 20 percent........more business means more profit. Most all will give volume discounts if requested. 6. These companies will very likely jump at the chance to promote their business and help the consumer......by giving a discount.......and a satisfied customer through word of mouth brings them more business, and many individual jobs is the same as volume jobs, so they can use that to line up and schedule work with individual discounts.7. If contacted to participate, they likely in mass will sign on, and be anxious to do so.8. Sign on to what? Here's waht: Providing a discount to everyone who attends the power bill burning.9. How much of a discount? 10 percent!10. So what is the saving? If you get them to upgrade your insulation for 1500.00.........you get an extra 150.oo off plus hst If 4000.00 for a mini-split heatpump......you get an extra 400.oo off plus HST If 3000.00 for windows with argon gas...... you get 300.00 off plus hst If 20,000.00 for a ground source heat pump. you get an extra 2000.00 off plus Hst And so on.10. Everyone who comes and burns their power bill will get a coupon, citing the 10 percent discount, and which companies are participating in the protest by offering these discounts. If our govn, the Pub, our MHAs and the power companies are out to shaft us, then we the consumers of power, let's give them the shaft.........take your friggin MF power and stick it ,where the sun don't shine! Tell the government to get your money to pay for this boondoggle somewhere else.....the richer folk, with higher tax rates if necessary, the big contractors with higher corporate taxes, claw back Ed Martin's 6 million payout.........but not granny living alone, nor the middle class trying to get by. You might hike our rates, but we will use less electricity.

If we can line up for Chase the Ace,for one chance in 3 million, or to save 2 cents on gasoline.....this should too should be a success. And remember......the saving form the coupon is only a small part of what you save. These measures save you on power bill year after year...truly the gift that keeps on giving.

If this sounds good......the next step is to line up the participating companies who will give the discounts. Should not be hard to do. And then get coupons printed.

There are lots of questions. Was the 3rd party testing the lines really independent? What exactly did they inspect and test? Since the stop work order has been lifted, does that mean the ServiceNL accident investigation is complete? Do we have to ATIPP the thing to read it? Why are they using weasel phrases like "designed and erected according to industry best practices"? I don't care what Vallard claims to be best practice - I do care if the design and installation procedures provide the required level of safety on this project and if other practices could have prevented the accident.

Manitoba Hydro, consultant to Nalcor, advised the towers in many areas should be upgraded to meet a 1 in 1000 year event. Nalcor said they know best and chose a 1 in 200 year standard, less rigorous than recommended by MH. Expect major problems in terrain with poor access in winter.

Some of us decried this and Nalcor's arrogance from the outset. This was short term cost reduction and long term pain and expense.

I must admit, I thought the idea of burning power bills and reducing energy consumption had some merit and see some interest, but this seems not the case. Maybe a poor idea? I have long been of the opinion1. that only when power rates jump significantly do people react to protest seriously.2. that all the talk of unaffordable power rates of 17 or 23 cents is just that ..talk. That many can indeed afford higher rates, or will conserve only when needed. Many who are middle class, and even low income, waste money on non essentials..........so higher power rates....... much ado about nothing........... or so it seems, on a personal level, except that the govn debt will impede other government services for a long time. But power bills.....that is a necessity, so I guess those in power have sized this up pretty good........there will be no protests, no organized resistance, we will pay our bills , whatever they are. Conservation will follow shock prices on power rate, no counter action to send a message.We have a defeatist mind set, it seems. Must be our culture? I thought bonfire day Nov 5 might be the right time .........but a lozy idea , it seems.PFPF

I think the power bill doubling will be a big event. I work in a "middle class" environment and people talk all the time about having to sell things or giving up things because there is so little disposable income left. The levy took away $100, the 15% tax on car and house insurance took more, inflation continues at around 10% (official rates are propaganda) yet we have no raises. We are worse off every year.

There will be many that will absorb the extra few hundred in electricity, but there will be far more for which it is the final straw. The end of disposable income will kill off many small businesses as people will only purchase necessities. Growth areas will be dollar stores. If we end like the USA, we will also see pay-day-loans, liquor stores and pawn shops in every plaza. All businesses will sell lottery tickets.

Politicians run scared of Bank induced foreclosures. When the forensic audit and commission of inquiry materializes, credit dries up. This could be the real reason for NL gov. deferring until Stan gets er done! Then comes the flood.

"Is it normal for a society in crisis to be so blasé about its future?"

With regards to NLers? Yes, it is... indeed, the psychological stasis and loathing of change afflicting the psyche of most NLers is precisely what has enabled these bipartisan miscreants and culprits that NLers, without fail, continue to elect as their leaders.

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About Des Sullivan

Uncle Gnarley is written by Des Sullivan, of St. John's.
He is a businessman engaged in real estate, retail and development companies.
A Director of Sullivan Capital Corporation, he is a former Executive Assistant to Premier's Frank D. Moores (1975-1979)and Brian Peckford (1979-1985).
He also served as a Part-Time Board Member on the Canada-Newfoundland Labrador Offshore Petroleum Board (C-NLOPB).
Uncle Gnarley permitted the use of his highly regarded name provided he could have full access to state his own rather unequivocable opinions. (A more detailed Profile of Uncle Gnarley is described in the very first Post entitled "Uncle Gnarley is alive and well" found on this site.
Sullivan is a firm advocate of sound fiscal management by the provincial government and intends to use this Site as a forum for commentary on the major issues of the day. Says Sullivan, "Newfoundland and Labrador inspires debate on a variety of issues, a veritable Muskrat Falls of opinion".
Readers are invited to leave their opinions, too.
Uncle Gnarley will post every Monday, and more often as events warrant.